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November 4, 2008

Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy.

Today's sponsor is

(Click on company name or banner to learn more.)
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[Guidance Overview] Year-End Checklist for Tax-Qualified Retirement Plans (PDF)
5 pages. Excerpt: "The following checklist describes potential year-end amendments and notices that may be necessary for tax-qualified retirement and savings plans. This list is not exhaustive, but is intended to provide a reminder of the general issues that may need to be reviewed and considered." (Morgan, Lewis & Bockius LLP)

[Guidance Overview] Implications of the Current Market Conditions for DB Plans and Possible Options for Dealing with the Challenges they Present (PDF)
3 pages. (The Segal Group, Inc.)

[Guidance Overview] Court Bars ESOP-Owned Company from Advancing Defense Costs of Officers Accused of ERISA Fiduciary Breach (PDF)
At page 6 of 9 pages. Excerpt: "In Johnson v. Couturier, 2008 WL 4443085 (E.D. Cal. Sept. 26, 2008), a district court issued an injunction barring an employee stock ownership plan (ESOP)-owned company from advancing the costs of defense under the corporate officers' indemnification agreements with the company. The lawsuit alleged that the corporate officers had breached their ERISA fiduciary duties by engaging in a 'scheme to defraud' the ESOP-owned company by paying themselves grossly excessive compensation. The court found that plaintiffs had shown a substantial likelihood of success on this claim." (Proskauer Rose LLP)

[Guidance Overview] IRS Implements Enrolled Retirement Plan Agent Program
Excerpt: "EBIA Comment: When the IRS revised Circular 230 to authorize ERPAs to practice before the IRS, it recognized the increasing role that TPAs, benefits consultants, and similar service providers who are not attorneys, CPAs, enrolled actuaries, or enrolled agents have come to play in drafting and administering tax-qualified retirement plans. But note that, although ERPAs are now authorized to practice before the IRS, the scope of their practice is limited." (Employee Benefits Institute of America)

[Guidance Overview] Plan Can Offset Loan Balance Despite Violation of DOL Limit on Use of Plan Benefits to Secure Loans
Excerpt: "EBIA Comment: We felt this case was worthy of note because of the questionable plan loan program practices involved and the sheer audacity of the employee's claim that he should be allowed to collect the same benefit twice. While the claim arose in the context of a loan from a defined benefit pension plan (a less common occurrence than loans from 401(k) and other defined contribution plans)." (Employee Benefits Institute of America)

Litigation and the Credit Crunch
Excerpt: "Pension funds are bringing securities class actions against banks and other financial institutions on the grounds that they misled their investors by not making plain the quality of assets on their balance sheets and failing to write them down in a timely fashion. Not only US pension funds, but also their European counterparts are taking action to claim compensation for their losses through the US courts. UK pension funds Lothian and the Northern Ireland Local Government Officers Superannuation Committee, as co-lead plaintiffs, are both involved in legal action to recover losses through investments in Lehman Brothers. Some of the large Dutch pension funds are also believed to be considering legal action." (Global Pensions)

Working with the PBGC: A Practical Business Guide for Consulting Actuaries (PDF)
75 pages. (Keightley & Ashner LLP)

Schwab Finds Employer Match, Employee Savings Link
Excerpt: "In a new report, Charles Schwab reveals its finding that there is a strong connection between a plan sponsor's company match contribution formula and participant savings rates." (; free registration required)

Proposed Automatic IRA Savings Plan Could Help Millions
Excerpt: "Here's how [the Automatic IRA] would work: Companies with more than 10 employees that have no retirement plan and have been in business for more than two years would be mandated to offer a payroll-deduction saving option -- similar to the way employers deduct for taxes. Employees would be enrolled automatically when they are hired, unless they choose to opt out." (The Columbus Dispatch)

Court Allows Comcast Company Stock Suit to Move Forward
Excerpt: "The U.S. District Court for the Eastern District of Pennsylvania has moved forward several fiduciary breach claims against Comcast Corporation for its handling of company stock retirement plan investments. The court rejected Comcast's assertion that a previous ruling in a case against Avaya Inc. extended protection for fiduciaries who decided to offer Comcast stock as an investment option because the plan is an eligible individual account plan (EIAP). In its opinion, the court pointed out that the Avaya plan mandated that company stock be offered as an investment option . . ., entitling Avaya fiduciaries to a presumption that it was prudent to offer company stock, whereas the Comcast plan only said company stock 'may' be offered to participants." (planadvisor)

[Opinion] The Question of Hardship Reductions of Nest Eggs
Excerpt: "Presidential candidates John McCain and Barack Obama have proposed to let cash-strapped Americans forgo penalties for early withdrawals from their 401(k)'s and IRAs. For older participants, they've also proposed a temporary relaxation of the requirement that people must make annual withdrawals from their IRAs and 401(k)'s beginning at the age of 70. These are not break-the-budget proposals, but, hey, the budget's already broken, so that's not even much of an issue these days. No, the issue here boils down to whether giving individuals the right to make their own financial choices leads to good decisions. And if the answer is no, should the government step in?" (U.S. News & World Report)

Sponsored by: IRS & AIRE, LLC

(Click on company name or banner to learn more.)
Banner ad for IRS & AIRE, LLC

The Enrolled Retirement Plan Agent Program is now available!

Earn the privilege of practicing before the IRS with the new Enrolled Retirement Plan
Agent (ERPA) designation. The initial exam window opens on January 6, 2009.
Be prepared and register NOW!

(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)

Links to Items on Executive Comp, Benefits in General

[Guidance Overview] No Jury Trial in ERISA Claims for Benefit Case
Excerpt: "Most readers are aware that the federal courts long ago settled that ERISA 29 U.S.C. 1132(a)(1)(B) claims for benefits were equitable in nature. 'Equitable' is a word that bears more than its share of freight in legal matters. In this instance, the word is shorthand for centuries of legal history that culminates in the practical conclusion that the plaintiff gets no jury trial." (Health Plan Law blog by Attorney Roy F. Harmon III)

[Guidance Overview] Granting Stock Options in Turbulent Times: Choosing Valuation Assumptions (PDF)
6 pages. Excerpt: "Admittedly, stock option valuation is an inexact science, and the primary sources of this imprecision are the volatility and yield assumptions used in the Black-Scholes model. The other four inputs are either explicitly stated (exercise price) or empirically observable from historical data (risk-free rate, expected term and fair market value). Volatility and yield, on the other hand, are based on future expectations, and thus historical or current data patterns are not the only -- or even the most relevant -- factors that should be considered." (Towers Perrin)

Employment Costs in Private Industry, September 2008
Excerpt: "Private industry wages and salaries increased 2.9 percent in September 2008. In September 2007 the increase was 3.4 percent. Benefit costs increased 2.4 percent in the 12-month period ended September 2008, the same as in the previous period." (U.S. Bureau of Labor Statistics)

To Get Employees' Attention, How You Communicate Is Just As Critical As the Message Itself
Excerpt: "Most benefits communication experts agree; the four corners to effective employee communication are: 1. Keep it simple - no jargon allowed. 2. Use a communication vehicle your employees understand. 3. Get the message out decisionmakers, who are sometimes people other than employees - like spouses. 4. Communicate on a year-round basis. One-hit wonders don't provide lasting impact." (Employee Benefit News; free registration required)

Employee Ownership Update for November 3, 2008
NCEO Executive Director Corey Rosen discusses the results of a new NCEO survey on the effects of the credit crunch on ESOP companies; five research fellowships in employee ownership sponsored by the Beyster Institute and Rutgers; a renewed push for broader employee ownership in France; and the 2009 cost-of-living increases for benefit plan dollar limitations from the IRS. (National Center for Employee Ownership)

Banks Owe Billions in Pay and Pensions to Executives
Excerpt: "Troubled financial giants getting cash infusions from the U.S. government owed executives more than $40 billion for deferred pay and pensions as of the end of 2007, the Wall Street Journal reported in an analysis. The sums owed are mostly for special executive pensions and deferred compensation, including bonuses, for prior years, according to the paper's website." (Reuters)

Brief Overview of Some Common Executive Health and Welfare Benefit Programs
Excerpt: "While retirement benefits have received much attention, the focus here is on the non-retirement benefit components, often referred to as 'health and welfare' programs. This terminology groups together the benefits received for certain specific life events -- death, disability, illness, injury, and paid time off -- each addressing common health and welfare needs." (Hay Group)

Newly Posted Events
(Post Yours!)

E-Seminar: Communicating with Plan Participants in Times of Market Volatility
Nationwide on November 12, 2008
presented by University Conference Services

Webinar -- Before You Sign -- Ten key contract provisions which can save your organization 10% on your health plan.
Nationwide on November 5, 2008
presented by Optimatum Group LLC

Newly Posted Press Releases
(Post Yours!)

ERIC & NBGH File Joint Amicus Brief Supporting Full Ninth Circuit Court of Appeals Review of San Francisco Employer "Play-or-Pay" Ordinance
ERIC (ERISA Industry Committee)

CRR Funding Opportunity: 2009 Sandell Grant Program
Center for Retirement Research at Boston College

CDM Retirement Consultants, Inc. Offers Savings Incentive On Conversions
CDM Retirement Consultants, Inc.

Guardian Enhances Spanish Language Enrollment Capabilities

Does Your Company Have What it Takes to Make the Dave Thomas Foundation for Adoption's Third Annual Top 100 Adoption-Friendly Workplace List?
Dave Thomas Foundation for Adoption

Wachovia Extends Customer Service Hours to 401k Participants
Wachovia Retirement Services

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Client Service Representative
for Tegra Financial Partners, a division of Habif, Arogeti & Wynne
in GA

Enrolled Actuary
for Preferred Pension Planning Corporation
in NJ

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